**Garth Boyd, Ph.D. Camco**  **Date: March 13th, 2008** 

### Opportunities **for American**  **Agriculture in the V oluntary**  **Carbon Credit Market** Who Cares?
 **International Solution**  **to the risk of climate change** : • Kyoto Protocol
 **US States, Market and Proposed National Solutions to the risk of climate change**  • California AB 32 • Western Climate Initiative • Chicago Climate Exchange • Regional Greenhouse Gas Initiative (RGGI) • Lieberman -Warner Bill • And many, many more initiatives at the state levelWho Cares?GHG Emissions Cap = 100 Metric Ton Total Allowances = 100 1 MT = 1 Allowance GHG Emissions Cap

**30 A**  **10 A**  **25 A**  **20 A**  **15 A** 
Emissions = 10 MT 25 MT 30 MT 15 MT 20 MT = 100 MTGHG Emissions Cap & Trade GHG Cap = 100 MT Allowances = 100

Emissions = 15 MT 20 MT 30 MT 20 MT 15 MT = 100 MT **5 MT 10**  **A + 5**  **A 25**  **A**

**- 5**  **A 30**  **A 15**  **A + 5**  **A 20**  **A**

**- 5**  **A 5**  **A 5**  **A**GHG Emissions Cap & Trade and Offsets

Emissions = 15 MT 20 MT 35 MT 20 MT 15 MT = 105 MT **5MT 10**  **A + 5**  **A 25**  **A**

**- 5**  **A 30**  **A**

**+ 5 C 15**  **A**

**+ 5 A**  **20 A** 

**- 5**  **A 5**  **A 5**  **A GHG Cap = 100**  **Al low** **ances = 100 GHG Offsets = 5**  **Effect: Cap Broken**  **But Credits**  **from dairy offset**  **imbalance 5 C** What is a Carbon Credit?
 A certified reduction in GHG emissions equivalent to one metric ton (2204 pounds) of Carbon Dioxide



# mt CO 2

# eThree Ways to Reduce Carbon in the Atmosphere


##  **Emission reduction:** switch to better technologies with lower emissions  **Energy substitution:** using more renewable fuels to replace fossil fuels  **Off -** **setting by sequestration:**  biotic uptakes from the atmosphere (e.g. tree planting)What is the Size and Value of the Market?
 **Voluntary 2006**  • 23.7 million metric tons • $91 million USD • $4.10 Average wholesale price for a VER/carbon credit

 **Compliance 2006** • 2.7 billion metric tons • $58 billion USD • $10.90 Average wholesale price for a CER/carbon creditWhy Voluntarily Buy Carbon Credits?

 Corporate social responsibility/environmental ethics
 Public relations/branding
 Sales of carbon neutral products
 Anticipation of regulationVoluntary Carbon Credit Buyers by VolumeCarbon Neutral: Type of Emissions OffsetPreferred Standard/Certification ProceduresDistribution of Project Types on the CCXVoluntary Market
 **Quality , Quality** **, Quality : Challenge for the Voluntary** **M arket** 
 **A high quality carbon credit must be:**  • Real (project has happened that created it) • **Additional** (beyond business-as- usual activities) • Measurable • Permanent (not temporarily displace emissions) • Independently verified • Unique (not used more than once to offset emissions) • Transparent (public disclosure) • Conservative (assumptions, values, procedures)High Quality Ag Generated Carbon Credits:

• Command higher prices • Improve rural economies • Avoid potentially damaging revelations that ag is getting a free ride by getting paid for “business as usual” farm and ranch management • Promote the use of new technologies that otherwise are dependent on government subsidies • Involve an unregulated (GHG’s) sector of society in solving climate change issues through financial incentives • Provide numerous ancillary environmental benefits from GHG reduction projectsOne Example - Camco Dairy Lagoon Cover Program
 **Simple, reliable lagoon cover technology** • Low cost, effective • Utilizes/improves existing facilities • Builds on farmer’s investments in manure collection and storage  **Environmental benefits** • Air quality: greatly reduces odor, ammonia, particulate and greenhouse gas emissions • Water quality (prevents storm water from entering lagoon)  **Economic benefits** • Generates carbon credits • Provides additional farm income • Opportunity for on -farm electricity generation and heat energy utilizationWhy Dairy Cows?  **Law :**  12 cubic feet of biogas produced/lb of VS digested  **Proven Assumptions:** • 17 lbs of VS/day per 1375 lb lactating dairy cow • 17 lbs VS x 50% destruction efficiency = 8.5 lbs VS • 8.5 lbs VS x 12 cu ft/lb VS =102 cu ft biogas/cow/day • 102 cu ft x 60% CH 4 in biogas = 61 cu ft/CH 4/cow/day • 61 cu ft/cow/day x 365 days/yr = 22,338 cu ft CH 4/cow/year • 21 GWP multiplier x 22,338 cu ft CH 4/cow/yr = 469,098 • 469,098 x .0448 lbs/cu ft CH 4 = 21,016 lbs CO 2e • 21,016 lbs/2204 lbs/mt = **9.5 mt/cow /year CO**  **2 e**   **2000 cow s**  **x 9.5 = 19,000 mt CO 2** **e/y ear** Free Stall Flush SystemLagoon or Holding PondOpen -air Manure Lagoons (“baseline scenario”)
VOC, NH 3 , H 2 S, N 2 O, CO 2 , **CH 4** 

**anaerobic decomposition (bacteria)**  Odor Greenhouse gases Dairy/hog barn

Lagoon Liquid manure
Air Quality Concerns: • Odor • Ammonia • Greenhouse gas emissionsCovered Manure Lagoons (emission reductions)
CO 2

**anaerobic digestion** Dairy/hog barn

Lagoon Liquid manure Biogas (CH 4 ) Generator/flare

Result: • Reduced odor • **Reduced greenhouse gases** Air-tight membrane cover CH 4 CH 4 CH 4 ElectricityLagoon Cover and Biogas PipeCamco Lagoon Cover Program - Dairy Example


###  ~2,000 cow dairy  Capital cost for installation = $200,000  10,000 credits per site • Average 5 metric tons of credits per cow per year  Carbon price = $5/mt  Amortize capital over 5 years  Gross proceeds = $500,000 over 10 years

Figures may vary based on site specific conditions**Earth Observation System**

**Satellite Database Data A** **nalysis Carbon Models**  **Carbon A ccounts**  **WWW**

**Ma rkets**  **Buyers Carbon Sellers** The Bottom Line 

# Global climate change issues



# = opportunity for AgricultureCamco - Leaders in Carbon Market Solutions
 **Camco’s business is “solutions to climate change”** • Carbon assessment and footprinting • Carbon management • Project identification & evaluation • Carbon Asset Development • VER asset generation • Policy, strategy & technical advisor  **Leader in global climate change business**  • 18 -year legacy • Listed on the London Stock Exchange • Over 220 staff worldwide, operating out of 17 offices • Across 11 countries – Austria, Bulgaria, China, Kenya, Malaysia, Russia, South Africa, Tanzania, UK, USA, Vietnam  **Service orientation**

## Garth Boyd, Ph.D.

garth.boyd@camcoglobal.com www.camcoglobal.com Camco Denver, CO 910 -328-4454